Usually, on the Marketing Rescue podcast, we tell the stories of brands – brands who made it and brands who didn’t. But on today’s episode, we’re going to talk a bit about technologies, and how business decisions (including marketing) shape the technologies we end up using.
If you’re old enough, cast your mind back to the mid-to-late 1970s when if you wanted to watch a show, you watched it when it came on. Once. At the same time as everyone else. If you missed it… you missed it. But right at the end of the 1970s, something happened that changed all of that. In fact, changed how we watched TV And movies – fundamentally.
The invention of the Video Cassette Recorder (VCR)
For the first time, families could set the VCR to record a favorite show, and watch it when they wanted. They could rent a movie at the local grocery store or video store, and watch it (again) when they wanted.The VCR was a huge change in the entire media landscape. It’s helpful to remember (or learn for the first time) that the way VCRs came to market, and the VHS format, in particular, was far from pre-ordained.
The story of bringing video to home viewing is an instructional tale for anyone interested in bringing new products, or new technologies, to market. The story started in the 1950s, in Japan when Dr. Sawazaki developed a prototype videotape recorder. This invention started a race to see who could bring this technology to market first. In 1956, Ampex (the company known mostly for making recording media like video and audiotape) released the world’s first commercially available video recorder – the Ampex VRX-1000.
At the time, there were six major firms fighting for who would get a consumer product to market that was truly successful. Of those six – the two that emerged as the leaders were the electronics giants, JVC and Sony. They were working on two different formats, or standards.
JVC had their money on a standard they called “VHS” which stands for Video Home System. At the same time, engineers at Sony were working on multiple formats, one of these was called Betamax. Betamax had a great picture and sound quality – the best of the consumer-friendly models. Unfortunately, it was expensive compared to VHS and it could only record up to an hour on tape. This becomes the focal point in the battle for a consumer standard – the balance between quality, recording length, and achieving that balance at price consumers would pay.
Both JVC and Sony were working on this balance: JVC had longer record time, but lower quality while Sony had higher quality, but shorter record time. These two formats: VHS and Betamax quickly emerged as the front-runners in the battle for home video, even while they were still in prototype. JVC (and eventually other companies) started making VHS machines and Sony went with the Betamax machines. The two approaches could not have been more different.
Building consensus, and making friends
Here are some of the key differences in how JVC and Sony took their tech to market: JVC worked harder with the industry to build up support. Sony didn’t. When Japan tried to make an industry standard they got Sony’s former partners like Matsushita to side with them It is possible that JVC may have ended up adopting the Betamax standard had Sony been a bit more open.
Sony, on the other hand, refused the advice of others, including companies they’d previously partnered with like Matsushita. They preferred “better” licensing deals over customer-accessibility.
Betamax opted for high-quality proprietary formats (ex: Minidisc, MSX, Video Game cartridges, and PlayStation).By 1980, JVC’s VHS format controlled 60% of the North American videocassette market. As a result of their proprietary format – Sony got sued by motion picture companies for encouraging the recording of copyrighted material. Sony eventually won the lawsuit but by the time it was over, and they fully entered the market in video stores, VHS already dominated a majority of the shelf space
Consumer Price and Accessibility
Right off the bat – Betamax was often 3x as expensive as VHS. Sony justified this by its quality – touting it as the highest quality standard. JVC focused on giving customers what they wanted – customers valued a higher recording time over the higher quality of audio and video.
As of 1984, 40 companies were supporting the VHS format and only 12 were supporting Betamax. VHS controlled 75% of the video rental market. In 1988, Sony broke down and adopted the VHS format. And the battle was over. VHS reigned supreme until 2005 when it was replaced by DVD. Today few people even remember that Betamax machines were a thing. And even fewer actually had one. But the reason JVC won the video wars, is an instructional tale for all industries that involves agreeing on a standard. They sacrificed short-term licensing profits for the sake of creating the market standard.
The history of consumer electronics is filled with these stories: From vinyl and 8-track tapes to Cassettes and CDs. Through the battles for digital standards including mp3s (versus formats you’ve never heard of, like Ogg Vorbis, FLAC, and AACplus (oh, and who can forget Windows Media Audio codecs?).
So what can brands, and marketers, learn from the format wars?
Gear your strategy to the market – to your consumer. Not to technology. “Start with the end in mind” – don’t get so wrapped up in your technology, or your social media platform, or your targeting algorithm, that you forget about emotional resonance with your audience.
Are you thinking about both sides? Are you making it the BEST while also making the BEST FOR YOUR CONSUMER? They may not be the same thing. No matter how good it is, a product, or a campaign, or an ad, is worthless if no one engages with it.
We speak about:
[5:10] Importance of the invention of videocassette recorder – VCR
[9:25] The way VCRs came to market and its applications for today
[11:00] VCRs history
[14:45] VHS and Betamax battle
[17:30] Different JVC and Sony approaches
[21:55] The reason VHS won the video format wars
[25:55] What could be learned